Buyer’s guide to voluntary benefits (July 2010)

Key facts

What are voluntary benefits packages?
A package of products and services offered to workforces, that benefit from group discounts. They are cheap to run and the benefits are paid for by staff. They are commonly offered online by a third-party provider.

Where can employers get more information?
See more articles and news.

Who are the main providers of voluntary benefits packages?
Ace European Group, Asperity Employee Benefits, Benefex, Edenred, Faircare, Grass Roots, LogBuy, Love2reward, Marsh, Next Jump, PeopleValue, Personal Group, P&MM, Thomsons Online Benefits, Vectis, You at Work.

Discounts on products and services are popular with employees, and an off-the-shelf voluntary benefits plan can be a cost-efficient option, says Tynan Barton

Voluntary benefits packages offer employees discounts on a range of products and services, at little cost to the employer. Organisations can offer these benefits to staff through an employer-branded online portal or advertise them via a benefits book.

Perks that can be offered through a voluntary benefits scheme can include discounts at high-street shops, hairdressers, holidays and computers. Schemes can also include tax-efficient benefits that could be made available through salary sacrifice arrangements. Perks that have tax breaks include bikes for work, childcare vouchers or health screening.

Voluntary benefits schemes are attractive for employers because they are inexpensive and straightforward to implement and run. Simple schemes can be run in-house by the reward or benefits team, but employers can also opt to use specialist voluntary benefits providers which will run the entire scheme including negotiating discounts.

Selecting an off-the-shelf package is much less expensive than using a specially tailored bespoke package. In these cases, a specialist provider will host the scheme and manage supplier relationships while all the employer needs to pay for is the administration.

Implementation costs

The cost of implementing an off-the-shelf voluntary benefits plan can differ depending on an organisation’s size. For example, an employer with 1,000 staff can expect to pay an average of £10 a year per employee.
Martin Cooper, head of marketing at Love2reward, says: “This is a relatively low-cost investment for employers because it is the individual who is purchasing benefits.”

Schemes are also fairly quick to implement compared with other benefits and can be a useful engagement tool during a downturn. Peter Waller, chairman of Benefex, says: “Normally, within a month or six-week period, you can have a scheme implemented. We saw a high take-up of schemes introduced in 2009, when a lot of employers were giving out little or no pay rises.”

Employers need to ensure a voluntary benefits package offers a range of choice to reflect the diversity of interests in their workforce. This involves not only the products or services offered, but also how staff can access the benefits. Glenn Elliott, managing director of Asperity Employee Benefits, explains: “If an employer provides a good choice of retailers and a good choice of how staff can get discounts – online discounts, cashback on online shopping, discount vouchers to use in store – then they will get high engagement.”

Meet employees’ preferences

Schemes can also be adapted to meet employees’ preferences. David Wall, managing director at LogBuy, says an online portal can enable staff to suggest deals that would benefit them personally. “Employees are able to suggest a deal, for example a discount for a restaurant in London, and our team will negotiate that deal, normally within two weeks. It is a great way of getting people to use the programme.”

Many schemes are now available online rather than paper based, giving employees easy access to the benefits. Staff can access a portal via a provider’s website with a username and password.

Organisations whose staff do not have access to the web can enable them to select perks via the telephone or a booklet. Guy Tarring, marketing director at PeopleValue, says: “We offer an offline catalogue as well as web-based portal. Primary offers go via the website, but [we] have to be flexible because employers have different requirements.”